The document discusses specialty pharmaceuticals, which treat complex chronic conditions at a high cost. Specialty pharmaceutical spending was $92.2 billion in 2013 and is expected to reach $110 billion by 2014. The top disease states for specialty drugs are oncology, autoimmune disorders, and respiratory conditions. Specialty pharmacies provide services like benefits investigation, prior authorizations, and clinical case management. Health systems can establish specialty pharmacies to better coordinate patient care, reduce costs from ER visits and readmissions, and leverage existing payer contracts and infrastructure. Specialty pharmacies require investments in licensing, technology, staffing and training but can generate over $200 million annually in prescription volume.

1. Jorge J. García, PharmD, MS, MHA, MBA
Director of Pharmacy Services
Memorial Healthcare System
Specialty Pharmacy
&
Oral Chemotherapies

2. Objectives
Define specialty pharmaceuticals
Review specialty pharmaceuticals cost trends
Discuss cost management strategies
Review distribution models
Review business opportunities

3. Definition
Specialty Pharmaceuticals
Treat complex, chronic, rare, difficult to manage conditions
High cost
 Limited or exclusive distribution
Other Characteristics:
 Handling requirements
 Close monitoring
 Mail distributions
 Cost control

4. Specialty Pharmaceuticals
Common Disease States:
 Oncology
 Autoimmune
 Respiratory
 Antiviral
 Immunosuppressive therapies

5. IMS Health, National Sales Perspectives, December 2014.

6. Specialty Pharmacy
Administrative Functions
 Benefits investigation
 Prior authorization
 Letters of medical necessity
 Claim adjudication
 Clinical case management
 Billing and collection
 Patient assistance
 If these functions are managed well, you are likely to get referals.
Am J Health-Syst Pharm – Vol 72 May 1, 2015

7. Cost
Specialty Pharmaceuticals
 Sales totaled 92.2 billion in 2013
27% of total drug spending in US
$110 billion market (2014)
 Commercial plans utilize > 90% of specialty spending on <
5% of enrollees.
1. Am J Health-Syst Pharm – Vol 72 May 1, 2015 2. IMS Health, National Sales Perspectives, 2014.

8. Pharmaceutical Pipeline
 36 new molecular entities to market in 2013
 10 cancer agents
 17 orphan drugs
 20 specialty
 Areas of Specialty
 17% - oncology
 14% - hepatitis C
 13% - inflammatory conditions
 5% - MS
 4% HIV
Patel, B., Audet P. A Review of Approaches for the Management of Specialty Pharmaceuticals in the United States.
PharmacoEconomics (2014) 32:1105-114

9. Cost
Specialty Pharmaceuticals
 Growth rate ranging from 18.4 – 19.1%
 NEHI research shows patient medication non-adherence
costs Health Care System $290 billion annually
Institute for Healthcare Improvement (IHI) Triple Aim
Improving the patient experience of care (including quality and
satisfaction);
Improving the health of populations; and
Reducing the per capita cost of health care
Am J Health-Syst Pharm – Vol 72 May 1, 2015

10. Cost Drivers
 Increased utilization
 Expanded indications
 New biologic agents

11. Cost Considerations
 Sofosbuvir (Sovaldi)
 Hepatitis C
 $84,000.00
 12-weeks curative tx
 First quarter sales = 2.3 billion

12. Definition
HUB
 high-touch
 comprehensive
 access
 reimbursement
 clinical services
 Highly engaging
 Yields better patient outcomes

13. Barriers of Entry
Pharmaceutical Industry
 Distribution models
 Quality
 Safety
Patel, B., Audet P. A Review of Approaches for the Management of Specialty Pharmaceuticals in the United States.
PharmacoEconomics (2014) 32:1105-114

14. IMS Health and the Center for Healthcare
Supply Chain Research. 2015
Limited Distribution Model
 Small to mid-size
patient population
 More severe side
effects
 Improved market
intelligence

15. IMS Health and the Center for Healthcare Supply Chain Research. 2015
Exclusive Distribution Model
 Small patient
population
 Orphan drug
categories
 Higher degree of comfort of product
handling and patient management

16. Barriers of Entry
Health Plans
 PBMs directing to owned specialty pharmacies
 Competing priorities
 Lack of expertise
 Cost management strategies
 Quality
 Treatment escalation
 Hospitalization reduction
Patel, B., Audet P. A Review of Approaches for the Management of Specialty Pharmaceuticals in the United States.
PharmacoEconomics (2014) 32:1105-114

17. Management Strategies
 Specialty tiers
 Prior authorization
 Co-payment and co-insurance
rates
4th Tier [pt. pays % total product
cost.
 Quality measures
 Utilization management
 Provider management
 Benefits design
 Value-based contracts

18. Management Strategies
 53% of plans saw shift in site-of-care
 physician offices  hospital outpatient facilities
 Oncology treatment administered by physician decreased from 87% in 2005
to 67% in 2011
 71% of plans indicate that moving infusion to lowest cost is a goal
 Health plans indicate goal to change reimbursement rates for hospital
outpatient clinics
 Value-based contracts
1. EMD Serono Specialty Digest, 2015, 11th Edition. 2. Press Release, Highmark, Inc. Feb 26, 2014
www.highmark.com/hmk2/newsroom/2014/pr022614.shtml

19. Management Strategies
 Introduction of the “Biologics Price Competition and Innovation Act”
(BPCIA) in 2009
 FDA authority to follow approval pathway for biologics considered
biosimilar to reference product
 Interchangeability potential
 Biosimilars first introduced in Europe in 2007
 > 16 products
 up to 35% cost reductions
Patel, B., Audet P. A Review of Approaches for the Management of Specialty Pharmaceuticals in the United States.
PharmacoEconomics (2014) 32:1105-114

20. Management Strategies
 Increased demand for Patient Assistance Programs (PAPs)
 Push for self-administration
 Site-of-care PAs

21. Opportunities
 Organization’s health plan –
employees
 Variety of specialty clinics
 Leverage payer contracts
 local vs. national
 Accreditation
 Provider buy-in
 Limited and exclusive distribution
breakdown
Patel, B., Audet P. A Review of Approaches for the Management of Specialty Pharmaceuticals in the United States.
PharmacoEconomics (2014) 32:1105-114
 Executive support
 ROI relative to other investments
 340B

22. Opportunities
 Not for everyone
 “A 2012 University Health System Consortium study of seven academic
medical centers found that, on average, they generated over $200
million annually in specialty prescription volume.”

23. Health Systems
 Patient Medical Record (PMR)
Laboratory tests
Progress notes
Clinic appointments
 Access
 Patient
 Care team
 Financial Assistance Support

24. Health Systems
 Reduction of ER visits and readmissions
 Coordination
 refills
 follow-up appointments
 labs

25. Build-Out Requirements
At a Glance
 Regulatory licenses
 Software / Integration
 Equipment & supplies
 Telephone lines
 Procedure and Polices
 Establish workflow
 Hiring
 Training plan
 Performance indicators’ metrics
 Minimally six month to enroll first
patient
 Performance Indicators’ Metrics
 Time to initiate therapy
 Patient adherence
 Call Center efficiency
 Clinical outcomes

26. Closing
Thoughts
 836 products.
PhRMA/AACR – Medicines in Development for
Cancer - 2015
Oncology
Pipeline

27. Closing Thoughts
 Distribution and fulfillment is
secondary to patient
management
 Increasing number of plans
using outcomes-based
contracts

28. Jorge J. García, PharmD, MS, MHA, MBA
Director of Pharmacy Services
Memorial Healthcare System
Specialty Pharmacy
&
Oral Chemotherapies